Sat, Nov 28, 2015
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Stratton St and Universal launch UCITS Renminbi Bond Fund

Monday, September 30, 2013
Opalesque Industry Update - Universal-Investment and London based fund manager Stratton Street are launching the Stratton Street UCITS Renminbi Bond Fund UI (ISIN LU0850782243). This new UCITS fund follows the strategy of the long-term successful Renminbi Bond Fund managed since 2007 by Stratton Street, a pioneer in the renminbi sector. The original strategy was set up before the offshore CNH or “dim sum” bond market, and has not yet invested in those bonds as they are illiquid and expensive. Instead at present the fund invests in high quality investment grade Asian bonds and uses currency hedges to gain renminbi exposure.

The original fund has had positive returns every year since launch, and a total return of 87% in its first five years (US dollar A class to end December 2012). This fund is one of the best performing fixed income funds over this period globally and is highly awarded. The new fund is a UCITS vehicle allowing more investors to buy into this successful strategy. Stratton Street has a different approach to most fixed income fund managers. Andrew Seaman, fund manager for the Stratton Street UCITS Renminbi Bond Fund UI says “index based bond funds buy more from the most indebted. We buy from creditors, who can sustain their debts and pay us back.” This investment process has driven the company to focus largely on investing in the high growth creditor nations of Asia, including China. These countries have enough overseas assets to pay back their foreign debts and they are borrowing to invest in their long term growth. Over the long term these net foreign asset positions are associated with currency appreciation, which is why Stratton Street is positive about the long term appreciation prospects for the renminbi. The fund allows investors to benefit from the expected renminbi appreciation and the anticipated opening of China’s capital market.

Stratton Street’s base assumption is that the currency will double in value over the next decade. The fund is relatively low volatility, as the renminbi is a fairly stable currency. Investors can reduce the currency volatility by investing in the different share classes for the euro, sterling and Swiss franc class, leaving only exposure to the appreciation of the renminbi against the dollar. A dollar class is also available, as well as a CNH (offshore renminbi) class for investors who wish to use the fund to get a 2 of 2 higher yield than renminbi deposits. With the bonds held being investment grade, and in many cases government or quasi government the credit risk is relatively low. The fund is suitable for investors who want to take a long term view on the performance of Asia and the Chinese currency while holding good quality assets that provide a steady income.

Stratton St Capital has been profiled in Asia Pacific Intelligence.

Press release


What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Other Voices: Hedge fund marketing and the selling cycle[more]

    By Bruce Frumerman. How long is the selling cycle now? That’s a question my financial communications and sales marketing consulting firm has been asked on a regular basis by hedge fund firm owners and sales people, ever since we opened the doors to our firm in 1987 pre-crash. Wa

  2. People - Solus Alternative Asset Management adds chief strategist from BTIG[more]

    From Daniel Greenhaus joined hedge fund manager Solus Alternative Asset Management as managing director and chief strategist. He will work closely with Chris Bondy, Solus’ chief economist, managing director and executive vice president, said Chris Pucillo, CEO and chief investmen

  3. Opalesque Roundtable: Seeding deal terms can be onerous for hedge funds[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Executives from fund of funds firms, family offices, a placement agent, a private equity firm, and an accounting firm gathered in Connecticut last month for the

  4. Opalesque Roundtable: Family offices flock to co-investment[more]

    Bailey McCann, Opalesque New York: Co-investments have been a hot topic for pension funds in recent years, as they try to move away from high fees and improve transparency. But now, family offices are more readily getting into the mix and establishing in-house deal teams, according to the delega

  5. More institutional investors invest in CTAs compared to last year despite dissatisfaction with performance[more]

    Benedicte Gravrand, Opalesque Geneva: "Despite a strong start to 2015 for CTAs in Q1, commodity market conditions have made return generation difficult for fund managers over much of the rest of the year to date," says Preqin’s November